UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
KRUPP CASH PLUS-II LIMITED PARTNERSHIP
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(Name of Issuer)
DEPOSITARY RECEIPTS
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(Title of Class of Securities)
501113 10 4
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(CUSIP Number)
John F. Hartigan, Esq.
Morgan, Lewis & Bockius LLP
801 South Grand Avenue
Los Angeles, CA 90017
(213) 612-2500
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(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
March 27, 1997
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with the statement / /. (A fee is
not required only if the reporting person (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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CUSIP No. 501113 10 4 SCHEDULE 13D Page 2 of 13 Pages
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<S> <C>
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Krescent Partners L.L.C.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
AF; WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
561,702.5518 Depositary Receipts
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NUMBER OF 8 SHARED VOTING POWER
SHARES 0
BENEFFICIALLY ------------------------------------------------------------------
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH 561,702.5518 Depositary Receipts
REPORTING ------------------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
561,702.5518 Depositary Receipts
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.5%
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14 TYPE OF REPORTING PERSON*
OO
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* SEE INSTRUCTIONS BEFORE FILLING OUT!
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CUSIP No. 501113 10 4 SCHEDULE 13D Page 3 of 13 Pages
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<S> <C>
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
AP-GP Prom Partners Inc.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
561,702.5518 Depositary Receipts
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NUMBER OF 8 SHARED VOTING POWER
SHARES 0
BENEFFICIALLY ------------------------------------------------------------------
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH 561,702.5518 Depositary Receipts
REPORTING ------------------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
561,702.5518 Depositary Receipts
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.5%
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14 TYPE OF REPORTING PERSON*
CO
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* SEE INSTRUCTIONS BEFORE FILLING OUT!
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CUSIP No. 501113 10 4 SCHEDULE 13D Page 4 of 13 Pages
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<S> <C>
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Apollo Real Estate Investment Fund II, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
561,702.5518 Depositary Receipts
------------------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES 0
BENEFFICIALLY ------------------------------------------------------------------
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH 561,702.5518 Depositary Receipts
REPORTING ------------------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
561,702.5518 Depositary Receipts
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.5%
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14 TYPE OF REPORTING PERSON*
PN
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* SEE INSTRUCTIONS BEFORE FILLING OUT!
</TABLE>
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<TABLE>
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CUSIP No. 501113 10 4 SCHEDULE 13D Page 5 of 13 Pages
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<S> <C>
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Apollo Real Estate Advisors II, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
561,702.5518 Depositary Receipts
------------------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES 0
BENEFFICIALLY ------------------------------------------------------------------
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH 561,702.5518 Depositary Receipts
REPORTING ------------------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
561,702.5518 Depositary Receipts
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.5%
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14 TYPE OF REPORTING PERSON*
PN
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* SEE INSTRUCTIONS BEFORE FILLING OUT!
</TABLE>
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STATEMENT PURSUANT TO RULE 13d-1
OF THE
GENERAL RULES AND REGULATIONS
UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "ACT")
Item 1. Security and Issuer.
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This statement relates to Depositary Receipts representing Units (the
"Units") of Krupp Cash Plus-II Limited Partnership, a Massachusetts limited
partnership (the "Partnership") which has its principal executive offices at 470
Atlantic Avenue, Boston, Massachusetts 02210.
Item 2. Identity and Background.
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This Statement is filed jointly by Krescent Partners L.L.C., a
Delaware limited liability company ("Krescent"), AP-GP Prom Partners Inc., a
Delaware corporation ("AP-GP Prom Partners"), Apollo Real Estate Investment Fund
II, L.P., a Delaware limited partnership ("AREIF II"), and Apollo Real Estate
Advisors II, L.P., a Delaware limited partnership ("AREA II"). Krescent, AP-GP
Prom Partners, AREIF II and AREA II are sometimes collectively referred to
herein as the "Reporting Persons."
Krescent was organized for the purpose of acquiring the Units
pursuant to a tender offer on Schedule 14D-1 (the "Schedule 14D-1"), commenced
on February 20, 1997 (the "Tender Offer"). The principal executive office of
Krescent is at 1301 Avenue of the Americas, 38th Floor, New York, New York
10019. The managing member of Krescent is AP-GP Prom Partners, a newly-formed
Delaware corporation which is ultimately controlled by Apollo Real Estate
Capital Advisors II, Inc., a Delaware corporation ("Advisors"), as general
partner of AREA II, the general partner of AREIF II, a private real estate
investment fund and the sole shareholder of AP-GP Prom Partners.
AREIF II is principally engaged in the business of investing in real
estate and real estate-related interests. The address of AREIF II's principal
business and its principal office is c/o Apollo Real Estate Advisors II, L.P.,
Two Manhattanville Road, Purchase, New York 10577.
AREA II is the general partner of AREIF II. AREA II is principally
engaged in the business of serving as managing general partner of AREIF II. The
address of AREA II's principal business and its principal office is Two
Manhattanville Road, Purchase, New York 10577. Advisors is the sole general
partner of AREA II. Advisors is principally engaged in the business of serving
as general partner of AREA II.
Attached hereto as Appendix A is information concerning the executive
officers and directors of AP-GP Prom Partners, the managing member of Krescent,
and Advisors, the general
Page 6
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partner of AREA II, as well as certain other entities, which information is
required to be disclosed in response to Item 2 and General Instruction C to
Schedule 13D. All such persons identified on Appendix A disclaim beneficial
ownership of and any pecuniary interest in the Units beneficially owned by the
Reporting Persons.
None of the Reporting Persons, Advisors, nor any of the persons or
entities referred to in Appendix A hereto, has, during the last five years, been
convicted in a criminal proceeding (excluding traffic violations and similar
misdemeanors) or been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree, or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
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As of the date hereof, the Reporting Persons are deemed to
beneficially own 561,702.5518 Units. The source of all funds used to acquire
beneficial ownership of such Units was investment funds from working capital of
Krescent, which was contributed by its members AREIF II, AP-GP Prom Partners and
Krescent LFG L.L.C.. None of the funds used to acquire beneficial ownership were
borrowed funds or otherwise obtained for the purpose of acquiring Units,
however, the Reporting Persons may, from time to time, use some or all of the
Units in connection with various collateral investment accounts in the ordinary
course of business. AP-GP Prom Partners, the managing member of Krescent, and
AREA II, the general partner of AREIF II, are deemed to beneficially own the
Units beneficially owned by Krescent and AREIF II, respectively. The Units
beneficially owned by the Reporting Persons were acquired as described below.
Pursuant to the Tender Offer, Krescent purchased an aggregate of
223,404.2271 Units on March 27, 1997 at a per Unit purchase price of $7.45, for
an aggregate purchase price of approximately $1,664,362. Prior to commencing the
Tender Offer, Krescent acquired 338,048.3247 Units pursuant to a tender offer
commenced November 29, 1996 for up to 4.9% of the outstanding Units at a price
per Unit of $7.45. Also, prior to commencing the Tender Offer, Krescent effected
a secondary market transaction on November 1, 1996 to acquire 250 Units at a per
Unit purchase price of $6.00 per Unit.
Item 4. Purpose of Transaction.
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Each of the Reporting Persons acquired beneficial ownership of the
Units for investment purposes only and not with the purpose of changing or
influencing control of the Partnership. Each of the Reporting Persons retains
the right, however, to change such investment intent, to acquire further Units
or to sell or otherwise dispose of all or a part of the Units beneficially owned
by such Reporting Persons in any manner permitted by law and in conformity with
their obligations under the Standstill Agreement and the Assumption Agreement,
as defined and described below in Item 6 and incorporated by reference herein.
Although the foregoing currently reflects the present plans and
intentions of the Reporting Persons, the foregoing is subject to change at any
time. The Reporting Persons have and will, on an on-going basis, continue to
evaluate their investment in the Partnership. In the event of a
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material change in the present plans or intentions of the Reporting Persons, the
Reporting Persons will amend this Schedule 13D to reflect such change.
Item 5. Interest in Securities of the Issuer.
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(a) and (b) As of the date hereof, the Reporting Persons are deemed
to beneficially own an aggregate of 561,702.5518 Units, which constitutes
approximately 7.5% of the Units outstanding.* The Reporting Persons have sole
voting and sole dispositive power of all such Units beneficially owned by them.
American Holdings I, L.P. ("American Holdings"), American Holdings
I-GP, Inc. and American Property Investors, Inc. (collectively referred to
herein as "AHI") commenced the Tender Offer as co-bidders with Krescent.
Pursuant to the Tender Offer, AHI purchased an aggregate of 403,421.8332 Units
on March 27, 1997. Prior to commencing the Tender Offer, AHI advised Krescent
that it did not own any Units. Therefore, as of the date hereof and based on
information provided by AHI to Krescent, AHI may be deemed to beneficially own
an aggregate of 403,421.8332 Units, which constitutes approximately 5.4% of the
Units outstanding.
The Reporting Persons and AHI may be deemed to constitute a "group"
because of their past cooperation in conducting the Tender Offer. If the
Reporting Persons and AHI are a group, they may be deemed to beneficially own
approximately 12.9% of the Units outstanding. Since the expiration of the Tender
Offer, however, each of the Reporting Persons and AHI has and will continue to
act independently with respect to the voting of Units and, except as described
in Item 6 below, there is no agreement or understanding among the Reporting
Persons or AHI with respect to the purchase, sale or voting, or refraining from
purchasing, selling, or voting, Units of the Partnership. The Reporting Persons
disclaim formation of a "group" with AHI pursuant to Rule 13d- 3 under the Act.
Neither the filing of this Schedule 13D nor any of its contents shall be deemed
an admission that the Reporting Persons have formed a "group" with AHI or that
the Reporting Persons are the beneficial owners of any of the Units held by AHI.
The Reporting Persons expressly disclaim formation of a "group" with AHI and the
Reporting Persons expressly disclaim beneficial ownership of any of AHI's Units.
(c) Except for the purchase of Units pursuant to the Tender Offer,
neither Krescent, AP-GP Prom Partners, AREIF II, AREA II, and to the best of
Krescent's knowledge, the persons listed on Appendix A, nor any affiliate
thereof, has effected any transaction in the Units within the past 60 days.
(d) The Reporting Persons have no knowledge of any persons who have
the right to receive or the power to direct the receipt of distributions from,
or the proceeds from the sale of, any Units beneficially owned by the Reporting
Persons.
(e) Not applicable.
- --------------------
* All calculations of percentages of beneficial ownership in this Schedule
13D are based on there being 7,499,718 Units outstanding, as of
September 30, 1996, as disclosed in the Partnership's Quarterly Report
on Form 10-Q for the period ended September 30, 1996.
Page 8
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Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
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to Securities of the Issuer.
----------------------------
The information set forth in Item 3, Item 4 and Item 5 above is
hereby incorporated by reference herein.
AREIF II entered into an Option Agreement, dated as of November 21,
1996 (the "Option Agreement") and amended by the First Amendment to Option
Agreement, dated as of January 8, 1997 (the "Option Amendment"), with Liquidity
Financial Group, L.P., a California limited partnership ("LFG") and an affiliate
of the financial advisor of Krescent in connection with the Tender Offer,
pursuant to which LFG was granted an option, for the 6 month period following
the latest date Krescent accepts securities in any tender offer, to acquire,
indirectly through a member of Krescent, up to a 5% interest in Krescent. The
discussion herein of the Option Agreement and the Option Amendment is subject to
and qualified in its entirety by reference to such agreements, copies of which
are attached hereto as exhibits and incorporated herein by reference.
Pursuant to an Assumption Agreement dated as of November 21, 1996
between Krescent and LFG, Krescent assumed the restrictions set forth in the
Settlement Agreement and Release, dated June 27, 1996, between LFG and The Krupp
Corporation ("Krupp") (the "Standstill Agreement"), as amended by the First
Amendment to Settlement Agreement and Release, dated as of October 8, 1996 (the
"First Amendment"), and by the Second Amendment to Settlement Agreement and
Release, dated as of January 6, 1997 (the "Second Amendment"). As a result,
Krescent agreed that, prior to the Standstill Expiration Date (as defined in the
Standstill Agreement), it will not and it will cause certain affiliates not to
generally acquire or attempt to acquire, directly or indirectly, more than 25%
(including Units acquired through all other means) of the outstanding Units or
take certain other actions not consistent therewith. The discussion herein of
the Assumption Agreement, the Standstill Agreement, the First Amendment and the
Second Amendment is subject to and qualified in its entirety by reference to
such agreements, copies of which are attached hereto as exhibits and
incorporated herein by reference.
Krescent entered into an Advisory Agreement, dated as of February 20,
1997 (the "Advisory Agreement"), with Liquidity Financial Advisors, Inc., a
California corporation ("Liquidity Financial"), pursuant to which Liquidity
Financial is entitled to certain advisory fees in exchange for advisory services
it performed for Krescent in connection with the Tender Offer. Such advisory
fees are to be equal to 2% of the amount invested by Krescent as of the
ninetieth day after acquisition of the Units pursuant to the Tender Offer, or
approximately $33,287. Further, after the members of Krescent have received
certain minimum priority returns on their invested capital, Liquidity Financial
will be entitled to additional participations in distributions from the
Partnership pursuant to the terms of the Advisory Agreement. The discussion
herein of the Advisory Agreement is subject to and qualified in its entirety by
reference to such agreement, a copy of which is attached hereto as an exhibit
and incorporated herein by reference.
Krescent and its members, on the one hand, and American Holdings and
its partners, on the other, entered into a letter agreement, dated as of
February 12, 1997 (the "Krescent-AHI Agreement"), relating to the conduct of the
Tender Offer and the purchase by American Holdings of the first 242,970 Units
accepted and 41.8% of the accepted Units thereafter tendered pursuant to the
Tender Offer. The Krescent-AHI Agreement also provides, among other things, that
(i) if, after the
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exercise and/or expiration of all outstanding options or other rights to acquire
an interest in Krescent, the direct and indirect percentage ownership interest
of AREIF II and its affiliates (the "Apollo Group") in Krescent exceeds 83.6%,
then American Holdings will be entitled to purchase additional Units from
Krescent so that, after giving effect to such purchase, the total percentage of
Units purchased by American Holdings in the Tender Offer equals 50% of such
percentage interest of the Apollo Group in Krescent; and (ii) each of American
Holdings and Krescent has the right to initiate a buy/sell right at any time
after the first anniversary of the expiration of the Tender Offer, or March 27,
1998, and so long as American Holdings and Krescent (and/or their respective
affiliates) own at least 2% of the outstanding Units. The buy/sell right
provides that either American Holdings or Krescent may offer to buy Units from
the other and the other must either sell such Units to the offering party or buy
the offering party's Units at a purchase price per Unit and on such other terms
and conditions as set forth in the initiating party's offer. The Krescent-AHI
Agreement also contains indemnification provisions pursuant to which the parties
agree to indemnify each other in respect to any material misstatements or
omissions in certain information provided by each of them in connection with the
Schedule 14D-1. The discussion herein of the Krescent-AHI Agreement is subject
to and qualified in its entirety by reference to such agreement, a copy of which
is attached hereto as an exhibit and incorporated herein by reference.
Except as described above, the Reporting Persons do not have any
contracts, arrangements, understandings or relationships with respect to any
securities of the Partnership.
Item 7. Material to be Filed as Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
<S> <C>
1 Option Agreement, dated as of November 21, 1996, between LFG and AREIF II.
2 First Amendment to Option Agreement, dated as of January 8, 1997, between LFG
and AREIF II.
3 Assumption Agreement, dated as of November 21, 1996, between LFG and Krescent.
4 Settlement Agreement and Release, dated as of June 27, 1996, between Krupp and
LFG.
5 First Amendment to Settlement Agreement and Release, dated as of October 8, 1996,
between Krupp and LFG.
6 Second Amendment to Settlement Agreement and Release, dated as of January 6,
1997, between Krupp and LFG.
7 Advisory Agreement, dated February 20, 1997, between Liquidity Financial and
Krescent.
8 Letter Agreement, dated February 12, 1997, between Krescent and American
Holdings.
</TABLE>
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: April 7, 1997
KRESCENT PARTNERS L.L.C.
By: AP-GP Prom Partners Inc., its managing member
By:/s/ Michael D. Weiner
---------------------
Name: Michael D. Weiner
Title: Vice President
AP-GP PROM PARTNERS INC.
By:/s/ Michael D. Weiner
---------------------
Name: Michael D. Weiner
Title: Vice President
APOLLO REAL ESTATE INVESTMENT FUND II, L.P.
By: Apollo Real Estate Advisors II, L.P.
Managing Member
By: Apollo Real Estate Capital Advisors II, Inc.
General Partner
By: /s/ Michael D. Weiner
---------------------
Name: Michael D. Weiner
Title: Vice President
APOLLO REAL ESTATE ADVISORS II, L.P.
By: Apollo Real Estate Capital Advisors II, Inc.
General Partner
By: /s/ Michael D. Weiner
---------------------
Name: Michael D. Weiner
Title: Vice President
Page 11
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APPENDIX A
The following sets forth information with respect to the executive
officers and directors of AP-GP Prom Partners, which is the managing member of
Krescent, and Advisors, which is the sole general partner of AREA II.
AP-GP Prom Partners. Messrs. Lee S. Neibart, W. Edward Scheetz and
Richard Mack are executive officers and directors of AP-GP Prom Partners. The
principal occupation of each of Messrs. Neibart and Scheetz, each of whom is a
citizen of the United States, is to act as an officer of Advisors. The principal
occupation of Mr. Mack, who is a citizen of the United States, is to act as an
associate of Advisors. The business address of each of Messrs. Neibart, Scheetz
and Mack is c/o Apollo Real Estate Management II, L.P., 1301 Avenue of the
Americas, New York, New York 10019.
Capital Advisors II. Messrs. Leon D. Black, John J. Hannan and William
L. Mack are executive officers and directors of Advisors. The principal
occupation of each of Messrs. Black and Hannan, each of whom is a citizen of the
United States, is to act as an executive officer and director of Apollo Capital
Management, Inc., a Delaware corporation ("Apollo Capital"), and of Lion Capital
Management, Inc., a Delaware corporation ("Lion Capital"). Messrs. Black and
Hannan are founding principals of Apollo Advisors, L.P. ("Apollo Advisors"), of
Lion Advisors, L.P. ("Lion Advisors") and, together with Mr. Mack, of Apollo
Real Estate Advisors II, L.P. The principal occupation of Mr. Mack, who is a
citizen of the United States, is to act as a consultant to Apollo Advisors and
as a principal of Apollo Real Estate Advisors, L.P. and to act as President and
Managing Partner of the Mack Organization, an owner and developer of and
investor in office and industrial buildings and other commercial properties. The
principal business of Apollo Advisors and of Lion Advisors is to provide advice
regarding investments in securities and the principal business of Apollo Real
Estate Advisors, L.P. is to provide advice regarding investments in real estate
and real estate-related investments. The business address of each of Messrs.
Black, Hannan and Mack is c/o Apollo Real Estate Management II, L.P., 1301
Avenue of the Americas, New York, New York 10019.
Page 12
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Exhibit Index
Exhibit
Ex-99.1 Option Agreement, dated as of November 21, 1996,
between LFG and AREIF II.
Ex-99.2 First Amendment to Option Agreement, dated as of
January 8, 1997, between LFG and AREIF II.
Ex-99.3 Assumption Agreement, dated as of November 21,
1996, between LFG and Krescent.
Ex-99.4 Settlement Agreement and Release, dated as of June
27, 1996, between Krupp and LFG.
Ex-99.5 First Amendment to Settlement Agreement and
Release, dated as of October 8, 1996, between
Krupp and LFG.
Ex-99.6 Second Amendment to Settlement Agreement and
Release, dated as of January 6, 1997, between
Krupp and LFG.
Ex-99.7 Advisory Agreement, dated February 20, 1997
between Liquidity Financial and Krescent.
Ex-99.8 Letter Agreement, dated February 12, 1997, between
Krescent and American Holdings.
Page 13
Exhibit 1
<PAGE>
OPTION AGREEMENT
AGREEMENT, dated as of November 21, 1996 (this "Agreement"), by and
between Liquidity Financial Group, L.P., a California limited partnership (the
"Optionee"), and Apollo Real Estate Investment Fund II, L.P., a Delaware limited
partnership (the "Fund").
W I T N E S S E T H:
WHEREAS, the Fund owns 29.23% of the outstanding limited liability
company interests (the "Krescent Interests") of Krescent LFG L.L.C., a Delaware
limited liability company ("Krescent LFG");
WHEREAS, Krescent LFG owns 17.1% of the outstanding limited liability
company interests (the "Bidder Interests") of Krescent Partners L.L.C., a
Delaware limited liability company (the "Bidder");
WHEREAS, the Bidder has commenced or will commence tender offers (the
"Tender Offers") to acquire units of Investor Limited Partnership Interest (or
assignee interests therein or depositary certificates representing such units)
(the "Units") of various real estate limited partnerships sponsored and/or
managed by The Krupp Corporation, a Massachusetts corporation (the "Targets");
and
WHEREAS, the Fund desires to grant to the Optionee an option to
acquire up to 100% of the Fund's Krescent Interests (the "Option Interests"),
upon the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Optionee and the
Fund hereby agree as follows:
1. Grant of the Options. The Fund hereby grants to the Optionee the
right to purchase (the "Option") all or any part of the Option Interests from
the Fund exercisable from the date Bidder accepts for payment Units tendered
pursuant to the Tender Offer until that date which is six months after the date
the Option becomes exercisable (the "Option Period"), at a purchase price (the
"Purchase Price") equal to five percent (5%) of the aggregate consideration paid
and expenses incurred by the Bidder for the Units in the Tender Offer together
with interest at a rate of 20% per annum based on a year of 366 days (calculated
from and after the date of the closing of the Tender Offer through and including
the date of the closing of the Option). If Optionee does not exercise the entire
Option, the Purchase Price shall be reduced pro rata in accordance with the
percentage of the entire Option exercised by the Optionee.
<PAGE>
2. Exercise of the Option. The Option to purchase the Option
Interests shall be exercisable in whole or in part on the terms and subject to
the conditions hereinafter set forth:
(a) In the event that the Optionee is entitled to and wishes to
exercise the Option, the Optionee shall, during the Option Period, send a
written notice (the "Exercise Notice") to the Fund identifying the date and
place for the closing (the "Closing") of the Option Interests to be purchased.
Delivery of the Exercise Notice prior to the expiration of the Option Period
shall be sufficient to entitle the Optionee to purchase the Option Interests
notwithstanding that the Closing may occur after the expiration of the Option
Period; provided, however, that the Closing shall not be more than fifteen (15)
business days from the date that the Exercise Notice is received by the Fund
unless another date is agreed upon in writing by the Fund and the Optionee.
(b) Payment of the Purchase Price for the Option Interests to be
acquired pursuant to the exercise of the Option will be made by the Optionee at
the Closing by delivering to the Fund, by wire transfer or by certified check
payable to the order of the Fund, an amount equal to the Purchase Price.
3. Transferability of the Option. The Option may not be assigned,
transferred, or otherwise disposed of, or pledged or hypothecated or in any way
be subject to execution, attachment or other process. Any assignment, transfer,
pledge, hypothecation or other disposition of the Option attempted contrary to
the provisions of this Agreement or any levy, execution, attachment or other
process attempted upon the Option will be null and void and without effect.
4. Sale of Option Interests. Except as provided in this Agreement,
the Fund shall not, without the express written consent of the Optionee, during
the Option Period, (i) sell or otherwise dispose of any or all of the Option
Interests, or (ii) convert such Option Interests into cash, capital stock or
other securities.
5. Adjustment Upon Changes in Capitalization. In the event of any
change in the Krescent Interests by reason of dividends, split-ups,
recapitalizations, combinations, exchanges of interests or the like, the type
and number of interests of Krescent Interests subject to the Option and the
Purchase Price shall be appropriately adjusted and proper provision shall be
made so that, in the event that any additional Krescent Interests become
outstanding as a result of any such change after the date of this Agreement, the
Option shall be adjusted so that, after such change and together with the
Krescent Interests previously outstanding pursuant to the exercise of the Option
(as adjusted on account of any of the foregoing change in Krescent Interests),
it equals 29.23% of the number of Krescent Interests then outstanding.
6. Investment. The Optionee acknowledges that the Option Interests
are not being offered pursuant to a registration statement under the Securities
Act of 1933, as amended (the "Act"), or any other securities laws. The Optionee
acknowledges that the Option Interests are being acquired for the Optionee's own
account for investment purposes only and not with a view to, or for sale in
connection with, any public distribution thereof and will not sell, or offer to
sell or otherwise dispose of, any interest in the Option Interests acquired by
the Optionee in violation of the Act. The Optionee has had substantial
experience in business and financial matters and in making investments of the
type contemplated by this Agreement, is capable of evaluating the merits and
risks of the purchase of the Option Interests and is able to bear the economic
risks of such investment.
-2-
<PAGE>
7. Representations and Warranties of the Fund. The Fund hereby
represents and warrants to the Optionee as follows:
(a) Organization. The Fund is a limited partnership duly formed,
validly existing and in good standing under the laws of the State of Delaware,
has all requisite power and authority to execute and deliver this Agreement and
perform its obligations hereunder. The execution and delivery by the Fund of
this Agreement and the performance by the Fund of its obligations hereunder have
been duly and validly authorized by the general partner of the Fund and no other
partnership actions on the part of the Fund are necessary to authorize the
execution, delivery or performance of this Agreement or the consummation of the
transactions contemplated hereby.
(b) Authorization. This Agreement has been duly and validly executed
and delivered by the Fund and constitutes a valid and binding agreement
enforceable against the Fund in accordance with its terms, except that (i) such
enforcement may be subject to applicable bankruptcy, insolvency or other similar
laws, now or hereafter in effect, affecting creditors' rights generally, and
(ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
(c) Title to Option Interests. As of the date hereof, the Fund is the
legal, beneficial and record owner of the Option Interests. The Fund has good
and marketable title to all of the Option Interests, free and clear of any
liens, encumbrances, equities, restrictions and claims of every kind and nature.
No person other than the Fund has any interest in or right to acquire any
interest in any of the Option Interests. There are no rights, options,
convertible or exchangeable, instruments or interests or commitments,
agreements, arrangements or undertakings of any kind to which the Fund is a
party or by which the Fund is bound obligating the Fund to deliver, sell, or
cause to be sold or delivered, the Option Interests.
(d) No Conflicts. Except for authorizations, consents and approvals as
may be required hereunder, (i) no filing with, and permit, authorization,
consent or approval of any state or federal public body or authority is
necessary for the execution of this Agreement by the Fund and the consummation
by the Fund of the transactions contemplated hereby and (ii) none of the
execution and delivery of this Agreement by the Fund and the consummation by the
Fund of the transactions contemplated hereby will (A) conflict with any or
result in any breach of any provision of the organizational documents of the
Fund, (B) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under any of the terms, conditions or
provisions of any indenture, license, contract, agreement or other instrument or
obligation to which the Fund is a party or by which it may be bound, or (C)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Fund.
8. Representations and Warranties of the Optionee. The Optionee hereby
represents and warrants to the Fund as follows:
(a) Organization. The Optionee is a limited partnership duly formed,
validly existing and in good standing under the laws of the State of California,
has all requisite power and authority to execute and deliver this Agreement and
perform its obligations hereunder. The execution and delivery by the Optionee of
this Agreement and the performance by the Optionee of its
-3-
<PAGE>
obligations hereunder have been duly and validly authorized by the general
partner of the Optionee and no other partnership actions on the part of the
Optionee are necessary to authorize the execution, delivery or performance of
this Agreement or the consummation of the transactions contemplated hereby.
(b) Authorization. This Agreement has been duly and validly executed
and delivered by the Optionee and constitutes a valid and binding agreement
enforceable against the Optionee in accordance with its terms, except that (i)
such enforcement may be subject to applicable bankruptcy, insolvency or other
similar laws, now or hereafter in effect, affecting creditors' rights generally,
and (ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
(c) No Conflicts. Except for authorizations, consents and approvals as
may be required hereunder, (i) no filing with, and permit, authorization,
consent or approval of any state or federal public body or authority is
necessary for the execution of this Agreement by the Optionee and the
consummation by the Optionee of the transactions contemplated hereby and (ii)
none of the execution and delivery of this Agreement by the Optionee and the
consummation by the Optionee of the transactions contemplated hereby will (A)
conflict with any or result in any breach of any provision of the organizational
documents of the Optionee, (B) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation or acceleration) under any of the terms,
conditions or provisions of any indenture, license, contract, agreement or other
instrument or obligation to which the Optionee is a party or by which it may be
bound, or (C) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Optionee.
9. Termination. Except as otherwise provided herein, the covenants and
agreements contained herein with respect to the Option Interests shall terminate
upon the expiration of the Option Period.
10. Notices. Notices relating to this Agreement shall be in writing and
delivered in person or by hand delivery or certified mail, return receipt
requested, postage prepaid, as follows:
If to the Optionee:
Liquidity Financial Group, L.P.
2200 Powell Street, Suite 700
Emeryville, California 94608
Attention: Brent Donaldson
with a copy to:
Morgan, Lewis & Bockius
1800 M Street N.W.
Washington, D.C. 20036
Attention: Lloyd Feller, Esq.
-4-
<PAGE>
If to the Fund:
c/o Apollo Real Estate Advisors, L.P.
1301 Avenue of the Americas
38th Floor
New York, New York 10019
Attention: W. Edward Scheetz
Richard Mack
with a copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Fax: (212) 856-7811
Attention: Peter M. Fass, Esq.
Steven L. Lichtenfeld, Esq.
or to such other address as either party may designate by written notice to the
other in accordance with this provision, and is hereby deemed to have been given
or made: if delivered in person, immediately upon delivery; if by telex,
telegram or facsimile transmission, immediately upon sending and upon
confirmation of receipt; if by nationally recognized overnight courier service
with instructions to deliver the next business day, one (1) business day after
sending; and if by certified mail, return receipt requested, three (3) days
after mailing.
11. Benefits of Agreement. This Agreement shall inure to the benefit
and shall be binding upon the successors, heirs, legal representatives and
permitted assigns of the parties hereto.
12. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to the
principles thereof respecting conflicts of laws.
13. Holidays. Whenever any payment to be made hereunder shall be stated
to be due on a Saturday, Sunday or any national holiday, such payment may be
made on the next succeeding business day.
14. Section Headings. The section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
15. Entire Understanding and Release. (a) This Agreement contains the
entire agreement between the Fund and the Optionee and supersedes any and all
prior agreements, understandings and undertakings, whether written or oral,
between the Fund and its officers, directors, employees or agents on the one
hand, and the Optionee on the other hand. No representations, warranties,
covenants or agreements, except those expressly set forth in this Agreement will
be deemed to have been made by either the Fund and its officers, directors,
employees or agents on the one hand, and the Optionee on the other hand.
-5-
<PAGE>
(b) The Optionee hereby releases, acquits and forever discharges the
Fund and its partners, employees and agents, as well as each of their respective
heirs, personal representatives, successors and assigns, from any and all
losses, damages, claims, demands, debts, actions, causes of action, suits,
contracts, agreements, obligations, accounts, defenses and liabilities of any
kind or character whatsoever, known or unknown, suspected or unsuspected, in
contract or in tort, at law or in equity, which the Optionee ever had, now has,
or might hereafter have against the Fund and its partners, employees and agents
for or by reason of any matter, cause or thing whatsoever which relates in any
manner, in whole or in part, directly or indirectly, to any agreement,
understanding, or undertaking of the Fund and its partners, employees, and
agents in connection with the transactions contemplated by this Agreement.
16. Severability. If any of the provisions of this Agreement shall be
held by a court of competent jurisdiction to be void or unenforceable, the
balance of the provisions of this Agreement shall remain in effect and be
enforced so as to give effect as nearly as possible to the intentions of the
Fund and the Optionee.
17. Execution. This Agreement may be executed in one or more
counterparts, each of which shall be deemed as original, but all of which
together shall constitute one and the same instrument. Facsimile signatures
shall be deemed an original.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
LIQUIDITY FINANCIAL GROUP
By: Liquidity Financial Corporation, its general
partner
By: /s/ Brent Donaldson
Name: Brent Donaldson
Title: President
APOLLO REAL ESTATE INVESTMENT FUND II,
L.P.
By: Apollo Real Estate Advisors II, L.P., its
general partner
By: Apollo Real Estate Capital Advisors II, Inc.,
its general partner
By: /s/ W. Edward Scheetz
Name: W. Edward Scheetz
Title: Vice President
-7-
<PAGE>
Exhibit 2
<PAGE>
FIRST AMENDMENT TO
OPTION AGREEMENT
FIRST AMENDMENT TO OPTION AGREEMENT, dated as of January 8, 1997 (the
"Amendment"), by and between Liquidity Financial Group, L.P., a California
limited partnership (the "Optionee"), and Apollo Real Estate Investment Fund II,
L.P., a Delaware limited partnership (the "Fund").
WITNESSETH:
WHEREAS, the parties entered into an Option Agreement, dated the 21st
day of November, 1996 (the "Agreement"), and now desire to amend the Agreement
to clarify the commencement of the Option Period; and
WHEREAS, Krescent Partners L.L.C., a Delaware limited liability company
(the "Bidder"), has commenced or will commence a series of tender offers (the
"Tender Offers") to acquire units of Investor Limited Partnership Interest (or
assignee interests therein or depositary certificates representing such units)
(the "Units") of various real estate limited partnerships sponsored and/or
managed by The Krupp Corporation, a Massachusetts corporation (the "Targets").
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. Section 1 of the Agreement is hereby amended and restated in its
entirety as follows:
1. Grant of the Options. The Fund hereby grants to the
Optionee the right to purchase (the "Option") all or any part of the
Option Interests from the Fund exercisable from the latest date
Bidder accepts for payment Units tendered pursuant to a Tender Offer
until that date which is six months after the date the Option becomes
exercisable (the "Option Period"), at a purchase price (the "Purchase
Price") equal to five percent (5%) of the aggregate consideration
paid and expenses incurred by the Bidder for the Units in the Tender
Offer together with interest at a rate of 20% per annum based on a
year of 366 days (calculated from and after the date of the closing
of the Tender Offer through and including the date of the closing of
the Option). If Optionee does not exercise the entire Option, the
Purchase Price shall be reduced pro rata in accordance with the
percentage of the entire Option exercised by the Optionee;
2. Except as expressly set forth above, the Agreement shall remain in
full force and effect without amendment or modification.
3. Capitalized terms used but not otherwise defined herein shall have
the meanings ascribed to them in the Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement under seal
as of the date first above written.
LIQUIDITY FINANCIAL GROUP, L.P.
By: Liquidity Financial
Corporation, its general partner
By: /s/ Brent Donaldson
-------------------
Name: Brent Donaldson
Title: President
APOLLO REAL ESTATE INVESTMENT
FUND II, L.P.
By: Apollo Real Estate Advisors II, L.P., its
general partner
By: Apollo Real Estate Capital Advisors II,
Inc., its general partner
By: /s/ W. Edward Scheetz
----------------------
W. Edward Scheetz
Vice President
<PAGE>
Exhibit 3
ASSUMPTION AGREEMENT (this "Agreement"), dated as of November 21, 1996,
between Liquidity Financial Group, L.P., a California limited partnership
("LFG"), and Krescent Partners L.L.C., a Delaware limited liability company (the
"LLC").
W I T N E S S E T H:
WHEREAS, LFG and The Krupp Corporation, a Massachusetts corporation
(the "Corporation"), entered into a Letter Agreement, dated as of June 27, 1996
and amended as of October 8, 1996 (the "Letter Agreement"), pursuant to which
LFG and its Affiliates (as defined therein) agreed to certain restrictions in
exchange for current lists (the "Lists") of the names and addresses of the
holders of the units of Investor Limited Partnership Interest (or assignee
interests therein or depositary certificates representing such units) (the
"Units") in various real estate limited partnerships sponsored and/or managed by
The Krupp Corporation, a Massachusetts corporation; and
WHEREAS, the LLC (i) has retained or will retain Liquidity Financial
Advisors, Inc., an affiliate of LFG, as its financial advisor and (ii) desires
to use the Lists for purposes consistent with the terms of the Letter Agreement.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the LLC agrees as follows:
2. The LLC hereby agrees to become bound by the Letter Agreement to the
extent LFG is so bound as if the LLC had executed the Letter Agreement as of
June 27, 1996, and amended as of October 8, 1996; provided, however, the LLC
shall only have liability with respect to its actions or inactions under the
Letter Agreement and shall not be liable for any breach of any representation,
warranty or covenant by LFG or any other party to the Letter Agreement.
3. The LLC shall not be bound by the Letter Agreement to the extent
that any of the obligations and liabilities of LFG under the Letter Agreement
are expanded, broadened, increased or enlarged.
4. Nothing contained herein shall require the LLC to pay, perform or
discharge any liabilities or obligations expressly assumed hereunder so long as
the LLC shall in good faith contest or cause to be contested the amount or
validity thereof.
<PAGE>
IN WITNESS WHEREOF, LFG and the LLC have caused this Agreement to be
duly executed as of the date first written above.
KRESCENT PARTNERS L.L.C.
By: AP-GP Prom Partners, Inc.,
its managing member
By: /s/ Richard Mack
----------------
Name: Richard Mack
Title: Vice President
LIQUIDITY FINANCIAL GROUP, L.P.
By: Liquidity Financial Corporation,
its general partner
By: /s/ Brent Donaldson
-------------------
Name: Brent Donaldson
Title: President
<PAGE>
Exhibit 4
<PAGE>
SETTLEMENT AGREEMENT AND RELEASE
This Settlement Agreement and Release (this "Agreement") is made and
entered into as of the 27th day of June, 1996, by and between The Krupp
Corporation ("Krupp"), a Massachusetts corporation with a principal place of
business at 470 Atlantic Avenue, Boston, Massachusetts 02210, and Liquidity
Financial Group, L.P. ("Liquidity") individually and on behalf of certain
Affiliates as hereinafter defined, a California limited partnership with a
principal place of business at 2200 Powell Street, Suite 700, Emeryville,
California 94608.
WITNESSETH:
WHEREAS, Liquidity is engaged in the business of sponsoring and
managing funds which invest in, among other things, real estate limited
partnerships;
WHEREAS, Krupp and certain affiliates sponsored and are engaged in
the business of managing, among other things, real estate limited partnerships;
WHEREAS, Liquidity sponsored and manages Liquidity Fund #33 LP as
well as other investment funds, and may in the future sponsor and manage and or
provide investment advice to additional investment funds (collectively, the
"Liquidity Funds"), and Krupp sponsored and manages Krupp Realty Fund, Ltd.-III
("Realty III") and Krupp Realty Limited Partnership-V ("Realty-V") as well as
other investment funds, and may in the future sponsor or manage additional
investment funds (individually a "Krupp Fund" and collectively, the "Krupp
Funds");
WHEREAS, Liquidity has, on behalf of certain of the Liquidity Funds,
sought to obtain from Krupp lists of the investors in certain of the Krupp Funds
for the stated purpose of contacting such investors in order to attempt to
acquire their units in the Krupp Funds;
WHEREAS, Krupp has refused to provide lists of the investors to
Liquidity, alleging that they are not entitled to obtain such lists and
Liquidity has stated that, absent a satisfactory resolution, its present
intention is to litigate the issue;
WHEREAS, the parties have conferred through their respective counsel
and are desirous of resolving and settling Liquidity's claims, upon the terms
and conditions hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. Delivery of Lists: Within ten business days of the date of this
Agreement, Krupp will deliver to Liquidity lists of investors (containing the
names, addresses and capital contributions of such investors) in Realty III and
Realty V. The lists will be sorted alphabetically and delivered in both paper
format and on 3.5" IBM Compatible computer diskette in ASCII format. Any
additional lists delivered pursuant to paragraph 3 below will also be delivered
in both paper format on 3.5" IBM Compatible computer diskette in ASCII format.
<PAGE>
2. Payment for Lists: Within ten business days of the date of this
Agreement, Liquidity will deliver to Krupp payment for the estimated cost of
reproducing and delivering such lists in the total amount of $600.00.
3. Provision of Additional Lists: From time to time during the twelve
month period commencing on the date hereof and expiring on the first anniversary
date of this Agreement, Krupp will, upon written request from Liquidity, deliver
to Liquidity within 15 business days of receipt of such written request, updated
lists of investors in Realty III and Realty V, or, to the extent a Liquidity
Fund is a Limited Partner or Shareholder (as the case may be) in any other Krupp
Fund, current lists of investors in such other Krupp Fund, provided such request
includes an undertaking by Liquidity to pay the cost of reproducing and
delivering such lists within 10 business days after receipt of such lists.
4. Restrictions on Activities: For a period commencing on the date
hereof and continuing for 30 months from the last date an investor list in a
Krupp Fund is delivered to Liquidity in response to Liquidity's request,
Liquidity and any person or entity controlling, controlled, managed or advised
by Liquidity or its subsidiaries (including the Liquidity Funds) or under common
control with Liquidity ("Liquidity Affiliates") shall not, without the prior
written consent of Krupp, which may be granted or withheld in Krupp's sole and
exclusive discretion and for any reason, or no reason:
(a) vote its interests in any Krupp Fund on any issue other than in
proportion to the votes of all other interest holders who vote on such issue;
(b) in any manner acquire, attempt to acquire, or make a proposal to
acquire, directly or indirectly, more than a 25% interest in any Krupp Fund;
(c) propose, or propose to enter into, directly or indirectly, any
merger, consolidation, business combination, sale or acquisition of assets,
liquidation or other similar transaction involving any Krupp Fund;
(d) form, join or otherwise participate in a "group" within the meaning
of Section 13(d)(3) of the Securities and Exchange Act of 1934, as amended, with
respect to any voting securities of a Krupp Fund;
(e) make or participate in any way, directly or indirectly, in any
solicitation of "proxies" or "consents" (as such terms are used in the proxy
rules of the Securities and Exchange Commission) to vote, or seek to advise or
influence any person with respect to the voting of any voting securities of any
Krupp Fund;
(f) sell, transfer or assign any interests in any Krupp Fund to any
person or entity not bound by the terms and conditions of this Agreement;
(g) disclose any intention, plan or arrangement inconsistent with the
terms of this Agreement; and
(h) loan money to, advise, assist or encourage any person in connection
with any of the actions restricted or prohibited by this Agreement.
-2-
<PAGE>
5. Use of Lists, Prohibition on Furnishing to Others: Any investor
list obtained by Liquidity or Liquidity Affiliates relative to any Krupp Fund
will be utilized only for the purpose of contacting investors to inquire as to
whether they wish to sell their units in such Krupp Fund to a Liquidity Fund,
and for no other purpose. The lists will not be furnished by Liquidity or
Liquidity Affiliates to any other person or entity.
6. Third Parties: If at any time Liquidity or Liquidity Affiliates is
approached or contacted by any third party concerning participation in a
transaction involving the assets, businesses or securities of any Krupp Fund or
involving any of the actions proscribed by Section 4 hereof or otherwise by this
Agreement, Liquidity or Liquidity Affiliates, as the case may be, will
immediately notify such party of its inability to participate in such a
transaction and, its obligation to notify Krupp and will thereafter promptly
(and in any event, within 5 business days) notify Krupp of the nature of such
contact and the parties thereto. Krupp will indemnify, defend and hold harmless
Liquidity and the Liquidity Affiliates from and against any and all claims,
demands or liabilities that may arise as a result of Liquidity's or any
Liquidity Affiliates' strict compliance with the terms of this paragraph.
7. Compliance with Securities and Other Laws: Liquidity and Liquidity
Affiliates acknowledge their obligations under the Securities Laws and Rules of
the Securities and Exchange Commission.
8. Provision of Copies of All Communications: Liquidity and Liquidity
Affiliates covenant and agree that they shall deliver to Krupp at least 5
business days before mailing or otherwise distributing to investors in any Krupp
Fund any communication to be given to one or more investors in any Krupp Fund.
9. Fiduciary Duties of Krupp; Safe Harbor Provision, Protection of
Partnership Status: Liquidity acknowledges that:
(a) Krupp and its affiliates have significant fiduciary obligations
to the investors in the Krupp Funds, and has stated that it is entering into
this Agreement to, among other things, fulfill those fiduciary obligations;
(b) Krupp may need to take certain further action to meet its
fiduciary obligations, including, without limitation, suspending the acceptance
of transfer paperwork in one or more Krupp Funds to avoid the termination of
such Krupp Fund's status as a partnership under the Internal Revenue Code of
1986 (the "Code"), as amended; avoid the treatment of such Krupp Fund as a
Publicly Traded Partnership under the Code; or cause the Krupp Fund to fall
outside any so-called "Safe Harbor" provision relating to taxation or tax
status, including provisions relating to Publicly Traded Partnerships; and
(c) That the suspension of the acceptance of transfer paperwork by
Krupp would mean that, notwithstanding the presentment of valid transfer
paperwork and the terms of this Agreement, transfers requested by Liquidity or a
Liquidity Affiliate would not be processed nor reflected on the books and
records of the Krupp Fund.
Nothing herein shall be construed, however, as an acknowledgement or
agreement by Liquidity that Krupp has the right under any particular
circumstances to suspend the acceptance of transfer paperwork, or as a waiver of
any future claims of Liquidity arising out of any such suspension or other
similar action.
-3-
<PAGE>
10. Release: For and in consideration of the agreements herein made,
Liquidity, individually and on behalf of the Liquidity Affiliates, does hereby
remise, release and acquit Krupp and all of its partners, officers, directors,
affiliates, predecessors, successors and assigns and each of their partners,
officers, directors, affiliates, predecessors, successors and assigns from and
against any and all claims, damages, costs, expenses, actions and causes of
action which Liquidity and the Liquidity Affiliates (including their partners,
officers, directors, affiliates, successors and assigns and all of their
partners, officers, directors, affiliates, predecessors, successors and assigns)
had in the past, now has, or may in the future acquire arising from or related
to the failure or refusal of Krupp to provide an investor list of any Krupp
Fund, except for such a failure or refusal in violation of the provisions of
this Agreement.
11. Notices: Any and all notices required or permitted hereunder shall
be in writing and shall be deemed given or served, as the case may be, upon
actual delivery to the parties at the following addresses:
If to Liquidity: Liquidity Financial Group, L.P.
2200 Powell Street-Suite 700
Emeryville, California 94608
Attention: Brent Donaldson
with a copy to: Roger B. Mead, Esq.
Folger & Levin
Embarcadero Center West Tower
275 Battery Street-23rd Floor
San Francisco, California 94111
If to Krupp: The Krupp Corporation
470 Atlantic Avenue
Boston, Massachusetts 02210
Attention: Laurence Gerber
with a copy to: Scott D. Spelfogel, Esq.
Vice President and General Counsel
The Berkshire Group
470 Atlantic Avenue
Boston, Massachusetts 02210
12. No Admissions, Confidentiality: The parties agree that this
Agreement is being entered into solely to settle disputed claims, and nothing
herein shall be deemed to constitute an admission of liability on the part of
Krupp, all such liability being expressly contested. The parties agree that
their discussions prior to entering into this Agreement, the nature, existence
and terms of this Agreement, and all matters relating to the dispute and
settlement shall be strictly confidential and not disclosed by either party to
any individual or entity, nor be admissible in court for any purpose.
Notwithstanding the foregoing, should either party believe that it must produce
this Agreement in response to subpoena or other lawful process, it shall first
notify the other party and provide the other party with at least 15 business
days in which to seek to quash or limit any such subpoena or process, before
producing this Agreement. To the extent the second party does not have standing
to seek to quash or limit the subpoena, the first party shall cooperate in such
efforts, provided such cooperation does not result in the incurring of any costs
on the part of said first party.
-4-
<PAGE>
13. Enforcement: The parties agree that each shall be entitled to
equitable relief, including injunctive relief and specific performance, in the
event of any breach of the provisions of this Agreement, in addition to all
other remedies available at law or in equity. In the event either party must
refer this agreement to an attorney for enforcement, the prevailing party shall
be entitled to all costs of enforcement, including attorney's fees.
14. Governing Law; Venue and Jurisdiction: This Agreement shall be
governed by the laws of the Commonwealth of Massachusetts without regard to
principles of conflict of law thereof. The parties agree that the Federal and
state courts located within the Commonwealth of Massachusetts shall have
exclusive jurisdiction over disputes arising hereunder, and the parties hereby
consent to such venue and submit to the jurisdiction of such courts.
15. Captions: Captions and section headings used herein are for
convenience of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.
16. Amendments: This Agreement may be amended, changed, modified,
altered or terminated only by written instrument or written instruments signed
by all of the parties hereto.
17. Severability: In the event any provision of this Agreement shall be
held invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any other provision hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement under
seal as of the date first above written.
LIQUIDITY FINANCIAL GROUP, L.P.
By: Liquidity Financial Corporation,
its general partner
By: /s/ Brent Donaldson
-------------------
Brent Donaldson
President
THE KRUPP CORPORATION
By: /s/ Laurence Gerber
-------------------
Laurence Gerber
President
-5-
Exhibit 5
<PAGE>
FIRST AMENDMENT TO
SETTLEMENT AGREEMENT AND RELEASE
This First Amendment to Settlement Agreement and Release (this
"Amendment") is made and entered into as of the 8th day of October, 1996, by and
between The Krupp Corporation ("Krupp"), a Massachusetts corporation with a
principal place of business at 470 Atlantic Avenue, Boston, Massachusetts 02210,
and Liquidity Financial Group, L.P. ("Liquidity") individually and on behalf of
certain Affiliates as defined in the Agreement (as hereinafter defined), a
California limited partnership with a principal place of business at 2200 Powell
Street, Suite 700, Emeryville, California 94608.
WITNESSETH:
WHEREAS, the parties entered into a Settlement Agreement and Release
dated the 27th day of June, 1996 (the "Agreement") and desire to the amend the
Agreement, to eliminate a possible ambiguity, as hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. Section 4(d), of the Agreement shall be and hereby is amended by
adding, at the end of said section following the semi-colon, the following
clause:
provided, however, that Liquidity and Liquidity Affiliates shall not
be deemed to be acting in a "group" in violation of this Section 4(d)
solely by virtue of their voting their interests in compliance with
Section 4(a) of this Agreement;
2. Except as expressly set forth above, the Agreement shall remain in
full force and effect without amendment or modification.
IN WITNESS WHEREOF, the parties have executed this Agreement under
seal as of the date first above written.
LIQUIDITY FINANCIAL GROUP, L.P. THE KRUPP CORPORATION
By: Liquidity Financial
Corporation, its general partner
By: /s/ Brent Donaldson By: /s/ Laurence Gerber
------------------- -------------------
Brent Donaldson Laurence Gerber
President President
<PAGE>
Exhibit 6
<PAGE>
SECOND AMENDMENT TO
SETTLEMENT AGREEMENT AND RELEASE
This Second Amendment to Settlement Agreement and Release (this
"Amendment") is made and entered into as of the 6th day of January 1997, by and
between The Krupp Corporation ("Krupp"), a Massachusetts corporation with a
principal place of business at 470 Atlantic Avenue, Boston, Massachusetts 02210,
and Liquidity Financial Group, L.P. ("Liquidity") individually and on behalf of
certain Affiliates as defined in the Agreement (as hereinafter defined), a
California limited partnership with a principal place of business at 2200 Powell
Street, Suite 700, Emeryville, California 94608.
WITNESSETH:
WHEREAS, the parties entered into a Settlement Agreement and Release,
dated the 27th day of June, 1996, as amended as of October 8, 1996 (as amended,
the "Agreement"), and now desire to the amend the Agreement, to eliminate a
possible ambiguity and to facilitate the contemplated transactions described
below, as hereinafter set forth;
WHEREAS, Krescent Partners L.L.C. (i) retained Liquidity Financial
Advisors, Inc., an affiliate of Liquidity, as its financial advisor, (ii) agreed
to become bound by the terms of the Agreement, and (iii) commenced tender offers
(the "Krescent Tender Offers") for units of Investor Limited Partnership
Interests of the real estate limited partnerships listed on Schedule I attached
hereto (the "Scheduled Partnerships");
WHEREAS, American Holdings I, L.P. ("AHI") desires to participate in
the Krescent Tender Offers and, therefore, has agreed to become bound by the
terms of the Agreement with respect to the Scheduled Partnerships; and
WHEREAS, Krupp has consented to the participation of AHI in the
Krescent Tender Offers upon AHI's agreement to be bound by the terms of the
Agreement with respect to the Scheduled Partnerships;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. Section 4(d) of the Agreement is hereby amended and restated in its
entirety as follows:
(d) form, join or otherwise participate in a "group" within
the meaning of Section 13(d)(3) of the Securities and Exchange Act of
1934, as amended, with respect to any voting securities of a Krupp
Fund, unless each member of such group agrees in writing to be bound
by the terms of this Agreement; provided, however, that Liquidity and
Liquidity Affiliates shall not be deemed to be acting in a "group" in
violation of this Section 4(d) solely by virtue of their voting their
interests in compliance with Section 4(a) of this Agreement;
<PAGE>
2. Krupp hereby agrees that the agreement between Liquidity and AHI,
attached hereto as Exhibit A, satisfies the requirements of the amended Section
4(d) of the Agreement, as set forth in Section 1 of this Amendment.
3. Except as expressly set forth above, the Agreement shall remain in
full force and effect without amendment or modification.
4. Liquidity represents that it has not made any statements
inconsistent with the terms of the Krescent Tender Offers and hereby agrees to
comply with the terms of that certain letter dated December 17, 1996 from Steven
L. Lichtenfeld to James Dubin, a copy of which is attached hereto as Exhibit B.
IN WITNESS WHEREOF, the parties have executed this Agreement under seal
as of the date first above written.
THE KRUPP CORPORATION
By: /s/ Laurence Gerber
-------------------
Laurence Gerber, President
LIQUIDITY FINANCIAL GROUP, L.P.
By: Liquidity Financial
Corporation, its general partner
By: /s/ Brent Donaldson
-------------------
Brent Donaldson, President
<PAGE>
SCHEDULE I
Krupp Realty Fund, Ltd. - III
Krupp Realty Limited Partnership - V
Krupp Realty Limited Partnership - VII
Krupp Cash Plus Limited Partnership
<PAGE>
Exhibit 7
<PAGE>
LIQUIDITY FINANCIAL ADVISORS, INC.
2200 Powell Street, Suite 700
Emeryville, California 94608
February 20, 1997
Krescent Partners L.L.C.
1301 Avenue of the Americas
38th Floor
New York, New York 10019
Attention: Mr. W. Edward Scheetz
Gentlemen:
When signed by Liquidity Financial Advisors, Inc. ("Advisor") and
countersigned by Krescent Partners L.L.C. (the "Bidder") this letter shall
constitute an agreement with respect to the Bidder's engagement of the Advisor
to act as its financial advisor in connection with its proposed acquisition of
Depositary Receipts representing units of investor limited partnership interests
("Units") in Krupp Cash Plus-II Limited Partnership, a Massachusetts limited
partnership (the "Partnership").
1. Certain Definitions. Capitalized words and phrases used in this letter
agreement have the following meanings:
a. "Acquisition" means, directly or indirectly, through one
transaction or a series of transactions, (1) the
acquisition of record and beneficial ownership of more than
1% of the outstanding Units in the Partnership by the
Bidder and/or one of its Affiliates by means of a merger,
consolidation, reorganization or other business combination
pursuant to which the Bidder and/or one of its Affiliates
is merged or otherwise combined with the Partnership; (2)
the acquisition by the Bidder and/or one of its Affiliates
by assignment of an economic interest consisting of, or of
record and beneficial ownership of, more than 1% of the
outstanding Units in the Partnership by means of a tender
or exchange offer, negotiated purchase or otherwise; or (3)
the acquisition by the Bidder and/or one of its Affiliates
of title to, or control over, all or substantially all of
the assets of the Partnership.
b. "Acquisition Equity" with respect to a Person means the
amount of such Person's equity capital invested in an
Acquisition Transaction or Affiliate Acquisition
Transaction as of the ninetieth day after the consummation
of such Acquisition Transaction or Affiliate Acquisition
Transaction.
c. "Acquisition Fee" shall have the meaning set forth in
paragraph 4(a).
d. "Acquisition Transaction" means the proposed Acquisition by
the Bidder of the Units.
e. "Advisor" means Liquidity Financial Advisors, Inc., a
California corporation.
f. "Affiliate" with respect to any Person has the meaning set
forth in Rule 12b-2 promulgated under the Securities
Exchange Act of 1934, as amended.
<PAGE>
g. "Affiliate Acquisition Transaction" means the Acquisition
Transaction and any Acquisition by an Affiliate of the
Bidder of limited partnership interests in a real estate
limited partnership in connection with which the Advisor
was engaged to act as financial advisor for such Affiliate.
h. "Anticipated Acquisition Equity" shall have the meaning set
forth in paragraph 4(b).
i. "Apollo Affiliate Investors" means AP-GP Prom Partners,
Inc., Apollo Real Estate Investment Fund II, L.P. and any
of their Affiliates that invest in an Affiliate Acquisition
Transaction.
j. "Associate" with respect to any Person has the meaning set
forth in Rule 12b-2 promulgated under the Securities
Exchange Act of 1934, as amended.
k. "Bidder" means Krescent Partners L.L.C., a Delaware limited
liability company.
l. "Business Day" means a day other than a Saturday, a Sunday
or a day on which banking institutions in the City of New
York are authorized or obligated by law or executive order
to close.
m. "Cash Flow Fee" shall have the meaning set forth in
paragraph 5(a).
n. "Depositary Receipt" means an instrument evidencing a Unit
or Units.
o. "Indemnified Party" shall have the meaning set forth in
paragraphs 7(a) and (b).
p. "Invested Capital" with respect to any Person means the
amounts contributed from time to time by such Person to the
capital of another Person.
q. "LF Partnership" shall have the meaning set forth in
paragraph 7.
r. "Partnership" means Krupp Cash Plus-II Limited Partnership,
a Massachusetts limited partnership.
s. "Person" means an individual, a corporation, a partnership,
a joint venture, a limited liability company, a trust, or
any other entity.
t. "Term" shall have the meaning set forth in paragraph 2(a).
u. "Units" means Depositary Receipts representing units of
investor limited partnership interests in the Partnership.
2. Term; Services.
a. The term ("Term") of the engagement by the Bidder of the
Advisor hereunder shall be two years beginning on the date
of this letter agreement. During the Term, the Advisor will
assist the Bidder on an exclusive basis in analyzing,
structuring, negotiating and effecting the Acquisition
Transaction on the terms and conditions set forth in this
letter agreement.
-2-
<PAGE>
In this connection, during the Term, exclusively on the
Bidder's behalf, the Advisor will, as requested by the
Bidder:
i. perform financial analysis of the Partnership in
the context of the Acquisition Transaction;
ii. assist the Bidder in its determination of the
appropriate price to be paid in the Acquisition
Transaction for the Units;
iii. advise the Bidder as to the structure and form
of the Acquisition Transaction;
iv. furnish the Bidder with such publicly-available
due diligence material as may reasonably be
requested by the Bidder;
v. furnish the Bidder with a current list of the
limited partners of the Partnership (or holders
of Units) and their addresses; and
vi. render such other financial advisory services as
may from time to time be reasonably requested by
the Bidder in connection with the Acquisition
Transaction.
b. The Advisor represents and warrants that neither it nor its
Affiliates or Associates have furnished to any Person
except the Bidder, and covenants and agrees that during the
Term it will not, and will cause its Affiliates and
Associates not to furnish, to any Person (other than
counsel for the Advisor) (i) the due diligence materials
provided to the Bidder hereunder, (ii) any list of the
limited partners of the Partnership (or holders of Units)
or (iii) any financial analysis of the Partnership prepared
for the Bidder, unless (I) it has first (A) furnished the
Bidder with a written notice setting forth its intention to
do so, the identity of each intended recipient of such
material and a description of any proposed or contemplated
Acquisition or other transaction involving such recipients
and (B) offered the Bidder the exclusive opportunity to
engage the Advisor in connection with such Acquisition or
other transaction, (II) the Bidder has failed to so engage
the Advisor within 10 Business Days after receipt of such
written notice and (III) the Bidder has consented in
writing to the proposed action of the Advisor, which
consent shall not unreasonably be withheld; provided,
however, that the Advisor will not, and will cause its
Affiliates and Associates not to, disclose to any Person in
violation of any agreement between the Advisor or any
Affiliate or Associate of the Advisor and the Partnership
or a general partner of the Partnership any list of the
limited partners of the Partnership (or holders of Units)
or take any other action in violation of any such
agreement.
c. The Advisor (i) represents and warrants that it has
heretofore disclosed in writing to the Bidder the identity
of any Person that holds or has a beneficial interest in
Units for whom the Advisor or its Affiliates serve as
general partners or advisors or to whom the Advisor or its
Affiliates owe any fiduciary duty or other obligation and
(ii) covenants and agrees that during the Term it will not
serve as a general partner or advisor for such a Person
(other than a Person specified in (i) above) or advise or
otherwise assist any Person (other than a Person specified
in (i) above or the Bidder) in acquiring a beneficial
interest in Units, unless (I) the Advisor has first (A)
furnished the Bidder with a written notice setting forth
its intention to do so, the identity of each Person
involved and a description of any
-3-
<PAGE>
proposed or contemplated Acquisition or other transaction
involving such Persons and the Units or the Partnership and
(B) offered the Bidder the exclusive opportunity to engage
the Advisor in connection with such Acquisition or other
transaction, (II) the Bidder has failed to so engage the
Advisor within 10 Business Days after receipt of such
written notice and (III) the Bidder has consented in
writing to the proposed action of the Advisor, which
consent shall not unreasonably be withheld.
d. The Advisor covenants and agrees that without the written
consent of the Bidder it will not, and will cause its
Affiliates and Associates not to, request any additional or
updated list of investors in the Partnership or any of its
Affiliates.
3. Expense Reimbursement. The Bidder will reimburse the Advisor for its
reasonable actual out-of- pocket expenses incurred in connection
with the Acquisition Transaction upon submission of substantiating
documentation.
4. Acquisition Fee.
a. If, during the Term, an Acquisition Transaction is
consummated, the Bidder agrees to pay Advisor an
acquisition fee ("Acquisition Fee") calculated as follows:
i. 2.0 percent of the Acquisition Equity of the
Bidder in such Acquisition Transaction until the
aggregate Acquisition Equity of the Bidder and/or
its Affiliates in all Affiliate Acquisition
Transactions theretofore consummated together
with the Acquisition Equity of the Bidder in the
Acquisition Transaction itself equals
$15,000,000; then
ii. 1.0 percent of the Acquisition Equity of the
Bidder in such Acquisition Transaction until the
aggregate Acquisition Equity of the Bidder and/or
its Affiliates in all Affiliate Acquisition
Transactions theretofore consummated together
with the Acquisition Equity of the Bidder in the
Acquisition Transaction itself equals
$45,000,000; then
iii. 0.5 percent of the Acquisition Equity of the
Bidder in such Acquisition Transaction until the
aggregate Acquisition Equity of the Bidder and/or
its Affiliates in all Affiliate Acquisition
Transactions theretofore consummated together
with the Acquisition Equity of the Bidder in the
Acquisition Transaction itself equals
$70,000,000; and then
iv. 0.25 percent of the Acquisition Equity of the
Bidder in such Acquisition Transaction after the
aggregate Acquisition Equity of the Bidder and/or
its Affiliates in all Affiliate Acquisition
Transactions theretofore consummated together
with the Acquisition Equity of the Bidder in the
Acquisition Transaction itself exceeds
$70,000,000.
b. At or prior to the closing of the Acquisition Transaction,
the Bidder will notify the Advisor in writing of the amount
of the Bidder's anticipated Acquisition Equity (the
"Anticipated Acquisition Equity") in such Acquisition
Transaction as of the ninetieth date after such closing and
at closing the Bidder will pay to the Advisor an
Acquisition Fee
-4-
<PAGE>
based on the amount of such Anticipated Acquisition Equity.
Within 10 days after the ninetieth day following the
closing of such Acquisition Transaction, a final
determination of the Bidder's Acquisition Equity in such
Acquisition Transaction as of the ninetieth day after the
closing date of the Acquisition Transaction will be made
the Bidder and the Advisor. Within 10 days after such
determination, the Bidder will pay to the Advisor any
additional amount of the Acquisition Fee determined to be
due or the Advisor will repay to the Bidder any amount of
the Acquisition Fee determined to have been overpaid.
5. Cash Flow Fee.
a. In addition to the fee payable pursuant to paragraph 4, the
Bidder will pay the Advisor a fee (the "Cash Flow Fee")
based upon the aggregate cash distributions of the Bidder
in connection with the Acquisition Transaction and the
Bidder's Affiliates in connection with all Affiliate
Acquisition Transactions, calculated and payable as
follows:
i. 100 percent to members of the Bidder and its
Affiliates until such time as the Apollo
Affiliate Investors have received cash
distributions in an amount equal to their
aggregate Invested Capital plus a cumulative
return of 15 percent per annum compounded
quarterly on their unreturned Invested Capital;
then
ii. 95 percent to members of the Bidder and its
Affiliates and 5 percent to the Advisor until
such time as the Apollo Affiliate Investors have
received cash distributions in an amount equal to
their aggregate Invested Capital plus a
cumulative return of 20 percent per annum
compounded quarterly on their unreturned Invested
Capital; and then
iii. 90 percent to members of the Bidder and its
Affiliates and 10 percent to the Advisor.
b. The Advisor covenants and agrees that its interest in the
Cash Flow Fee will not be assigned, pledged, hypothecated
or otherwise transferred to any Person other than its
Affiliates.
6. Representations, Warranties and Covenants.
a. The Advisor hereby represents and warrants to, and
covenants with, the Bidder as follows:
i. the execution and delivery of, and the
performance by the Advisor of its obligations
under, this letter agreement have been duly and
validly authorized by the Advisor, and this
letter agreement has been duly executed and
delivered by the Advisor;
ii. the Advisor is duly registered as an investment
adviser under the Investment Advisers Act of
1940, as amended;
iii. the Advisor does not possess any non-public
information with respect to the operations,
assets, liabilities, financial condition or
prospects of the Partnership;
-5-
<PAGE>
iv. the Advisor, together with its Affiliates and
Associates, is the beneficial owner of 1,750
Units and, except as contemplated hereunder or in
the option agreement dated November 21, 1996
between Liquidity Financial Group, L.P. and
Apollo Real Estate Investment Fund II, L.P.,
covenants and agrees that it will not, and will
cause its Affiliates and Associates not to,
acquire, directly or indirectly, a beneficial
interest in any additional Units;
v. the Advisor is not in breach of any covenant or
agreement with the Partnership and will not be
in breach of any covenant or agreement with the
Partnership;
vi. neither the execution, delivery or performance of
this letter agreement by the Advisor, the offer
by the Bidder to acquire the Units nor the
consummation by the Bidder of the Acquisition
Transaction conflicts or will conflict with or
constitutes or will constitute a breach of, or a
default under, any agreement or other instrument
to which the Advisor or any Affiliate or
Associate of the Advisor is a party or by which
any of them may be bound; and
vii. the information supplied or to be supplied by
the Advisor to the Bidder for inclusion in the
Schedule 14D-1 to be filed by the Bidder in
connection with the Acquisition Transaction, the
material to be filed as exhibits thereto and any
amendments thereto does not and will not, to the
Advisor's knowledge after due inquiry, contain
any untrue statement of a material fact or omit
to state any material fact required to be stated
therein or necessary in order to make the
statements made therein, in light of the
circumstances under which they were made, not
misleading.
b. The Bidder hereby represents and warrants to the Advisor as
follows:
i. the execution and delivery of, and the
performance by the Bidder of its obligations
under, this letter agreement have been duly and
validly authorized by the Bidder and this letter
agreement has been duly executed and delivered
by the Bidder;
ii. neither the execution, delivery or performance of
this letter agreement by the Advisor, the offer
by the Bidder to acquire the Units nor the
consummation by the Bidder of the Acquisition
Transaction conflicts or will conflict with or
constitutes or will constitute a breach of, or a
default under, any agreement or other instrument
to which the Bidder or any Affiliate or Associate
of the Bidder is a party or by which any of them
may be bound;
iii. the Bidder is not in breach of any covenant or
agreement with the Partnership and will not be
in breach of any covenant or agreement with the
Partnership.
7. Other Relationships. The Bidder understands and acknowledges
that to the extent disclosed pursuant to paragraph 2(c) Advisor
and/or its Affiliates serve as general partners or advisors to
Partnerships ("LF Partnerships") that own Units and,
accordingly, that Advisor and/or its Affiliates have fiduciary
or other obligations to the LF Partnerships, limited partners in
the LF Partnerships, and, depending on the circumstances, the
Partnership and other holders or beneficial owners of the Units.
Notwithstanding any provision of this letter agreement to the
contrary, the
-6-
<PAGE>
Bidder understands and agrees that, in providing services to the
Bidder hereunder, Advisor will not be obligated to render any advice
or assistance or provide any information that Advisor believes would
be inconsistent with its obligations to these other Persons. Advisor
may disclose to the LF Partnerships and their limited partners
information concerning this letter agreement and the terms of the
transactions contemplated hereby to the extent Advisor believes the
disclosure of such information is necessary to satisfy its
obligations to the LF Partnerships and their limited partners.
8. Indemnification.
a. The Bidder agrees to indemnify the Advisor and its
Affiliates and their respective partners, directors,
officers, employees, agents and controlling persons (each
such person being an "Indemnified Party") from and against
any and all losses, claims, damages and liabilities, joint
or several, to which such Indemnified Party may become
subject under any applicable federal or state law, or
otherwise related to or arising out of (i) the breach by
the Bidder of any representation, warranty or covenant made
by the Bidder in this letter agreement, (ii) the
Acquisition Transaction or (iii) the engagement of the
Advisor pursuant to, and the performance by the Advisor of
the services contemplated by, this letter agreement and
will reimburse any Indemnified Party for all reasonable
expenses (including reasonable fees and expenses of legal
counsel) as they are incurred in connection with the
investigation of, preparation for or defense of any pending
or threatened claim or any action or proceeding arising
therefrom, whether or not such Indemnified Party is a
party. The Bidder will not be liable under the preceding
sentence to the extent that any loss, claim, damage,
liability or expense relates to (i) a breach of any
representation or warranty made by the Advisor in this
letter agreement or (ii) the Advisor's bad faith, gross
negligence or willful misconduct in the performance by the
Advisor of the services contemplated by this letter
agreement
b. The Advisor agrees to indemnify the Bidder, its members and
their respective Affiliates, partners, directors, officers,
employees, agents and controlling persons (each such person
being an "Indemnified Party") from and against any and all
losses, claims, damages and liabilities, joint or several,
to which such Indemnified Party may become subject under
any applicable federal or state law, or otherwise related
to or arising out of (i) the breach by the Advisor of any
representation, warranty or covenant made by the Advisor in
this letter agreement, (ii) the breach by the Advisor of
any representation, warranty or covenant made by the
Advisor or any Affiliate or Associate of the Advisor in any
agreement with the Partnership or any general partner of
the Partnership or (iii) the Advisor's bad faith, gross
negligence or willful misconduct in the performance by the
Advisor of the services contemplated by this letter
agreement and will reimburse any Indemnified Party for
reasonable expenses (including reasonable fees and expenses
of legal counsel) as they are incurred in connection with
the investigation of, preparation for or defense of any
pending or threatened claim or any action or proceeding
arising therefrom, whether or not such Indemnified Party is
a party.
9. Independent Contractors; No Joint Venture. The parties acknowledge
and agree that the relationship between the Advisor and the Bidder is
that of independent contractors. Nothing in this letter agreement is
intended to create or shall be deemed to create or constitute a joint
venture or partnership between the Advisor and the Bidder.
-7-
<PAGE>
10. Assignment; No Third Party Beneficiaries. Neither party may assign
this letter agreement without the prior written consent of the other
party, and any purported assignment in violation of this provision
will be void. The terms and provisions of this letter agreement are
solely for the benefit of the parties hereto and other Indemnified
Parties and their respective successors, permitted assigns, heirs and
personal representatives, and no other person will acquire or have
any right by virtue of this letter agreement.
11. Termination. This letter agreement shall terminate on the later of
March 1, 1997 and the fifteenth day after either party has given
written notice to the other of the termination thereof. The
provisions of this letter agreement relating to the payment of fees
and indemnification as well as the provisions of paragraphs 2(b),
2(c), 6(a)(iv), 6(a)(v) and 6(b)(iii) will survive the termination of
this letter agreement.
12. Notices. All notices or other communications required or permitted
hereunder shall be sufficient if it is in writing and delivered by
hand or sent by prepaid telex, cable or telecopier or sent, postage
prepaid, by registered, certified or express mail, or by recognized
overnight air courier service and shall be deemed given when so
delivered by hand, telex, cable or telecopy or if mailed or sent by
overnight courier service, on the fifth business day after mailing
(one business day in the case of express mail or overnight courier
service) to the parties at the following addresses:
a. If to the Bidder, to:
c/o AP-GP Prom Partners Inc.
Apollo Real Estate Advisors II, L.P.
1301 Avenue of the Americas
38th Floor
New York, New York 10019
Attention: W. Edward Scheetz
Telecopy: (212) 261-4060
and:
c/o AP-GP Prom Partners Inc.
c/o Apollo Real Estate Advisors II, L.P.
1999 Avenue of the Stars
Suite 1900
Los Angeles, California 90067
Attention: Michael D. Weiner
Telecopy: (310) 201-4166
with a copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attention: Peter M. Fass
Telecopy: (212) 856-7822
-8-
<PAGE>
b. If to the Advisor to:
2200 Powell Street, Suite 700
Emeryville, California 94608
Attention: Brent Donaldson
Telecopy: (510) 596-3299
13. Paragraph Headings. The paragraph headings contained in this letter
agreement are inserted for reference purposes only and shall not
affect the meaning or interpretation hereof.
14. Governing Law. This letter agreement shall be governed by, and
construed in accordance with, the laws of the State of New York
without regard to conflict of law principles.
15. Waivers. The waiver by any party of the breach of any of the terms
and conditions of, or any right under, this letter agreement shall
not be deemed to constitute the waiver of any other breach of the
same or any other term or condition or of any similar right. No such
waiver shall be binding or effective unless expressed in writing and
signed by the party giving such waiver.
16. Counterparts. This letter agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same instrument.
17. Entire Agreement. This letter agreement contains, and is intended as,
a complete statement of all of the terms of the arrangements among
the parties with respect to the matters provided for herein and
supersedes any previous agreements and understandings between the
parties with respect to those matters. No amendment or modification
of the terms of this letter agreement shall be binding or effective
unless expressed in writing and signed by each party.
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<PAGE>
Please confirm that the foregoing correctly sets forth our agreement
by signing and returning to us the enclosed duplicate copy of this letter
agreement.
Very truly yours,
LIQUIDITY FINANCIAL ADVISORS, INC.
By: /s/ Brent Donaldson
-------------------
Name: Brent Donaldson
Title: President
ACCEPTED AND AGREED TO AS OF
THE DATE FIRST WRITTEN ABOVE:
KRESCENT PARTNERS L.L.C.
By: AP-GP PROM PARTNERS, INC.,
its Managing Member
By: /s/ Richard Mack
Name: Richard Mack
Title: Vice President
<PAGE>
Exhibit 8
KRESCENT PARTNERS L.L.C
1301 AVENUE OF THE AMERICAS, 38TH FLOOR
NEW YORK, NEW YORK 10019
February 12, 1997
American Holdings I, L.P.
100 South Bedford Road
Mount Kisco, New York 10549
Re: KRUPP CASH PLUS-II LIMITED PARTNERSHIP
Ladies and Gentlemen:
The parties hereto confirm their agreement to the terms of Exhibit A
annexed hereto, which terms are incorporated herein by reference, which
agreement is intended to be legally binding and enforceable upon execution and
delivery hereof and which, unless modified or terminated by a writing signed by
all of the parties hereto, constitutes the definitive agreement among the
parties relating to the subject matter hereof and thereof.
Each of the parties represents and warrants to the other that (1) it
has the right, power and authority to enter into this letter agreement, (2) upon
the execution of this letter agreement by each of the parties hereto, this
letter agreement will constitute the legal, valid and binding obligation of such
party, enforceable against such party in accordance with its terms, and (3) no
consent or approval of any third party or governmental agency or authority is
required for such party to execute and deliver this letter agreement or to
perform its obligations hereunder.
Each of the parties hereto agrees that the terms of this letter
agreement are confidential and may not be disclosed by any party hereto, except
as may be required by law and except to principals and authorized
representatives of the parties hereto, without the written consent of all of the
parties. Except as may be required by law, any public announcement regarding
this letter agreement or the transactions contemplated herein may not be made by
any party without the prior consent of all other parties hereto.
This letter agreement shall be governed by and interpreted in
accordance with the laws of the State of New York, without regard to the
conflicts of law provisions thereof.
This letter agreement may be executed in separate counterparts, each
of which shall be deemed an original but all of which together shall constitute
one and the same instrument. This letter agreement shall supersede all prior
agreements, written or oral, by or among any of the parties hereto with respect
to the subject matter hereof and may not be amended or otherwise modified except
in writing signed by all of the parties hereto. Any party may execute this
letter agreement by transmitting a copy of its signature by facsimile to the
other parties. In such event the signing party shall deliver an original of the
signature page to each of the other parties within one business day of signing
and failure to so deliver such originals shall result in the facsimile copy of
that party's signature being treated as an original.
<PAGE>
Very truly yours,
KRESCENT PARTNERS L.L.C.
By: AP-GP Prom Partners Inc.,
Managing Member
By: /s/ Richard Mack
-----------------
Richard Mack, Vice President
AP-GP PROM PARTNERS INC.
By: /s/ Richard Mack
-----------------
Richard Mack, Vice President
APOLLO REAL ESTATE INVESTMENT
FUND II, L.P.
By: Apollo Real Estate Advisors II, L.P.,
General Partner
By: Apollo Real Estate Capital Advisors II,
Inc., General Partner
By: /s/ William L. Mack
-------------------
William L. Mack, President
KRESCENT LFG L.L.C.
By: AP-GP Prom Partners Inc.,
Managing Member
By: /s/ Richard Mack
----------------
Richard Mack, Vice President
ACCEPTED AND AGREED TO AS
OF THE DATE FIRST ABOVE WRITTEN:
AMERICAN HOLDINGS I, L.P.
By: American Holdings I-GP, Inc.,
General Partner
By: /s/ Henry J. Gerard
-------------------
Henry J. Gerard, Vice President
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<PAGE>
AMERICAN HOLDINGS I-GP, INC.
By: /s/ Henry J. Gerard
-------------------
Henry J. Gerard, Vice President
AMERICAN REAL ESTATE HOLDINGS
LIMITED PARTNERSHIP
By: American Property Investors, Inc.,
General Partner
By: /s/ John P. Saldarelli
----------------------
John P. Saldarelli, Vice President
-3-
<PAGE>
EXHIBIT A
KRESCENT PARTNERS L.L.C./
AMERICAN HOLDINGS I, L.P.
PURCHASE OF UNITS OF INVESTOR LIMITED PARTNERSHIP INTEREST OF
KRUPP CASH PLUS - II LIMITED PARTNERSHIP
Tender Offer
Krescent Partners L.L.C. ("Krescent") and American Holdings I, L.P. ("AHI" and,
together with Krescent, the "Purchasers") propose making an offer (the "Offer")
to purchase up to 20.1% of investor limited partnership interests (the "Units")
of Krupp Cash Plus - II Limited Partnership (the "Partnership") at a purchase
price and upon other terms and conditions to be jointly determined by Krescent
and AHI and set forth in an Offer to Purchase (the "Offer to Purchase") and a
related Letter of Transmittal (the "Letter of Transmittal" and, together with
the Offer to Purchase, the "Offer"). The purchase price will be reduced by the
aggregate amount of distributions per Unit, if any, made or declared by the
Partnership after the date on which the Offer commences and prior to 12:00
midnight on the expiration date of the Offer (the "Expiration Date"). In
addition, if a distribution is made or declared after the Expiration Date but
prior to the date on which the Purchasers pay the purchase price for the
tendered Units, the Purchasers will offset the amount of such distribution from
the amount otherwise due a holder of Units pursuant to the Offer. The parties
propose to file a Tender Offer Statement of Schedule 14D-1 (the "Schedule
14D-1") relating to the Offer with the Securities and Exchange Commission (the
"Commission") as promptly as practicable following the execution and delivery
hereof.
Purchase of Units
The Units tendered to and accepted for payment by the Purchasers pursuant to the
Offer will be allocated between and purchased by the Purchasers as follows: (1)
first, an aggregate of 242,970 Units will be allocated to and purchased by AHI;
and (2) then, of the Units remaining after giving effect to clause (1) (the
"Remaining Units"), 41.8% of such Remaining Units will be allocated to and
purchased by AHI and 58.2% of such Remaining Units will be allocated to and
purchased by Krescent. In the event that 242,970 or fewer Units are tendered to
and accepted for payment pursuant to the Offer or the Offer is terminated
without any Units being purchased, AHI shall purchase Units from Krescent, at a
price of $7.45 per Unit, in an amount such that Krescent will own 58.2% of the
Acquired Units (as hereinafter defined) and AHI will own 41.8% of the Acquired
Units. Notwithstanding the foregoing, if the direct and indirect percentage
interest of Apollo Real Estate Investment Fund II, L.P. and its affiliates
(collectively, the "Apollo Group") in Krescent immediately following the
expiration and/or exercise of all outstanding options or other rights to acquire
an interest in Krescent, whether directly or indirectly, exceeds 83.6%, then AHI
will be entitled to purchase additional Units from Krescent, at the same
purchase price per Unit paid by the Purchasers pursuant to the Offer, so that,
after giving effect to such purchase, the total percentage of the Acquired Units
purchased by AHI equals 50% of such percentage interest of the Apollo Group in
Krescent. For purposes hereof, all Units purchased by AHI or Krescent pursuant
to the Offer or by Krescent pursuant to the Krescent Offer (as hereinafter
defined) are hereinafter collectively referred to as the "Acquired Units." The
Acquired Units purchased by AHI (including Units purchased by AHI from Krescent
as contemplated above) are hereinafter referred to as the "AHI Units" and the
Acquired Units purchased by Krescent (net of Units sold by Krescent to AHI as
contemplated above) are hereinafter referred to as the "Krescent Units." Each of
Krescent and AHI will pay the purchase price for the Units to be purchased by
them directly from Unitholders pursuant to the Offer by wire transfer to Herman
Group (as hereinafter defined).
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<PAGE>
Allocation of Expenses
AHI and Krescent shall share Total Expenses (as hereinafter defined) in the same
ratio as the number of AHI Units and the number of Krescent Units, respectively,
bear to the aggregate number of Acquired Units. Concurrently with the payment
for Units by AHI and Krescent and, if necessary, from time to time thereafter,
one party shall pay the other such amounts as may be necessary so that Total
Expenses are shared in such ratio. "Total Expenses" means all out-of-pocket
costs and expenses incurred by Krescent, AHI or their respective affiliates
(including attorneys fees and expenses) with respect to: (1) the Offer,
including, without duplication, the fees and expenses of The Herman Group, Inc.,
the information agent/depositary for the Offer ("Herman Group"), printing and
mailing expenses and Partnership transfer fees, but excluding any fees payable
to LFG (as hereinafter defined) or its affiliates; (2) the negotiation,
execution and delivery of this letter agreement; and (3) the Krescent Offer.
Total Expenses shall not include the costs of purchasing the Units. Each party
will provide, at the execution and delivery hereof, an estimate of its costs and
expenses incurred to date and shall provide, upon request, invoices or other
appropriate evidence of the incurrence of costs and expenses constituting Total
Expenses hereunder. As used herein, the "Krescent Offer" shall mean Krescent's
offer to purchase up to 4.9% of the Units made pursuant to a letter to
Unitholders dated November 29, 1996. Krescent purchased 338,048.3247 Units
pursuant to the Krescent Offer.
Standstill Agreement
In order to obtain a list of Unitholders, Liquidity Financial Group, L.P.
("LFG"), an affiliate of Krescent's financial advisor, Liquidity Financial
Advisors, Inc., entered into a settlement agreement and release, dated June 27,
1996, as amended as of October 8, 1996 and as of January 6, 1997 (the
"Standstill Agreement"), with the Partnership. Krescent assumed the obligations
of LFG under the Standstill Agreement pursuant to an assumption agreement, dated
as of November 21, 1996 (the "Krescent Assumption Agreement"). An affiliate of
AHI entered into a Standstill Agreement with the Partnership on November 26,
1996 as amended as of January 8, 1997 and February 3, 1997 (the "AHI Standstill
Agreement"). The parties have taken all such action necessary or desirable for
AHI to assume the obligations of LFG under the Standstill Agreement with respect
to the Partnership to the same extent that Krescent is bound thereby and to
amend the Standstill Agreement and the AHI Standstill Agreement to permit the
parties to engage in the transactions contemplated hereby. The parties will
cooperate in taking all other necessary action under the Standstill Agreement in
connection with the Offer and in seeking the agreement of the general partner of
the Partnership to admit Krescent and AHI as limited partners of the Partnership
or recognize Krescent and AHI as registered owners of Units to the same extent
as it agreed to so admit or recognize Krescent in connection with the Krescent
Offer.
Conduct of Offer
All decisions relating to the conduct of the Offer and the acquisition and
transfer of Units pursuant thereto, including without limitation any change in
the terms or waiver of any of the conditions thereof, shall be made jointly by
Krescent and AHI. Notwithstanding the foregoing, in the event that either
Krescent or AHI proposes to increase the purchase price for Units and the other
opposes such an increase, such purchase price shall, subject to the provisions
set forth below, nonetheless be increased as proposed, and the parties shall
take all necessary action to amend the Offer accordingly. The party proposing to
increase the purchase price shall so notify the other party in writing. Not
later than 5:00 p.m., New York City time, on the second business day following
receipt of such notice, the party receiving the notice shall notify the
proposing party whether it agrees to or opposes such increase. If AHI so
notifies Krescent of its opposition to an increase in the purchase price
proposed by Krescent, AHI shall have no further obligation to purchase the Units
pursuant to the Offer and Krescent shall thereafter control all decisions
regarding the conduct of the Offer and the acquisition and transfer of Units
pursuant thereto. In addition, in such event, Krescent shall retain all Units
purchased pursuant to the Krescent Offer and AHI shall not be entitled to
purchase any of such Units. If Krescent so notifies AHI of its opposition to an
increase in
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<PAGE>
the purchase price proposed by AHI, Krescent shall have no further obligation to
purchase the Units pursuant to the Offer and AHI shall thereafter control all
decisions regarding the conduct of the Offer and the acquisition and transfer of
Units pursuant thereto. In such event, AHI shall be entitled to purchase 41.8%
of the Units purchased by Krescent in the Krescent Offer. In either such event,
the parties shall execute and deliver such instruments and documents and
cooperate in taking any other action as may be necessary or desirable to amend
the Offer in accordance with the applicable requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations of the Commission thereunder. If a party opposes a proposed purchase
price increase, AHI shall be responsible for 41.8%, and Krescent shall be
responsible for 58.2%, of Total Expenses incurred through the date on which the
opposing party notifies the proposing party of its opposition (except that
expenses relating to the Krescent Offer shall be the sole responsibility of
Krescent if Krescent proposes a purchase price increase that is opposed by AHI),
and the proposing party shall be responsible for 100% of Total Expenses incurred
subsequent to such date.
Notwithstanding the foregoing, if the proposing party shall at any time lower
the purchase price for Units or shall breach its obligation to acquire Units
pursuant to the Offer (assuming all conditions thereto have been satisfied or
waived), the opposing party shall have the right (exercisable in its sole
discretion) to purchase Units (including the Krescent Units, if applicable) upon
the terms and conditions set forth herein, and, if the opposing party exercises
such right, the parties shall share Total Expenses as provided under "Allocation
of Expenses" above.
Cooperation
AHI and Krescent shall cooperate and provide each other with and disclose such
information as may be necessary or desirable to comply with the applicable
requirements of the Exchange Act and the rules and regulations of the Commission
thereunder. Neither party shall use the name of the other in any public
disclosure regarding the transactions contemplated hereby without obtaining the
prior written consent of such other party, which shall not be unreasonably
withheld or delayed.
AHI and Krescent shall also cooperate in connection with the transfer of Units
to AHI and Krescent, respectively, and, to the extent within their reasonable
control, in ensuring that AHI and Krescent are each accorded the benefits of
ownership of their respective Units from and after the date of the Closing,
notwithstanding any delays in the recognition or effectiveness of the transfer
of such Units to AHI or Krescent on the books of the Partnership. The parties
shall execute and deliver such further instruments and documents as may be
necessary or desirable in connection with the foregoing.
Krescent shall instruct Herman Group to provide AHI, upon request, with
information regarding the Offer and tenders made pursuant thereto and to provide
AHI with reports regarding such status and tenders as such reports are made to
Krescent.
Indemnification
Krescent and its members, jointly and severally, shall indemnify AHI and hold it
harmless against any loss, claim, damage or liability (or any action in respect
thereof) to which AHI may become subject, insofar as such loss, claim, damage or
liability arises out of or is based upon any violation of the Williams Act or
any untrue statement of a material fact included in the offer materials of
Krescent relating to the Krescent Offer or the omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading.
Krescent and its members, jointly and severally, on the one hand, and AHI and
its partners, jointly and severally, on the other, shall indemnify and hold
harmless the other against any loss, claim, damage or liability (or any action
in respect thereof) to which any of them may become subject, insofar as such
loss, claim, damage or liability arises out of or is based upon any violation of
the Williams Act or any untrue
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<PAGE>
statement of a material fact included in the Schedule 14D-1 or the omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, but only to the extent that any such
loss, claim, damage or action is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in reliance upon and in
conformity with information furnished by Krescent or its affiliates, on the one
hand, or AHI or its affiliates, on the other, for inclusion in such Schedule
14D-1.
Buy/Sell
Either AHI or Krescent may institute buy/sell procedures at any time commencing
on the first anniversary of the purchase of the Units by Krescent and AHI
pursuant to the Offer, as long as both parties (together with their respective
affiliates and members of their immediate families) continue to own at least 2%
of the issued and outstanding Units. These buy/sell provisions shall cover all
Units owned by AHI and by its affiliates and members of their immediate families
and all Units owned by Krescent and by its affiliates and members of their
immediate families, in each case, whether such Units were acquired prior to the
Offer, pursuant to the Offer or subsequent to the Offer. For purposes of these
buy/sell provisions, LFG shall not be deemed an affiliate of Krescent.
Accordingly, these buy/sell provisions shall not cover (1) that percentage of
the Krescent Units equal to the percentage interest in Krescent, if any, whether
direct or indirect, of LFG, its affiliates and members of their immediate
families or (2) any Units owned directly by any of them. These buy/sell
provisions shall not apply to the extent that any buy/sell transaction would
impose any liability under Section 16(b) of the Exchange Act.
Either party may initiate the buy/sell by delivering to the other a written
offer stating the purchase price on a per Unit basis and other material terms
and conditions on which the initiating party is willing to purchase all, but not
less than all, Units then owned by the non-initiating party.
The non-initiating party shall then be obligated to elect to sell Units to the
initiating party at the per Unit price and upon the other terms and conditions
set forth in the buy/sell offer, or to purchase all of the initiating party's
Units upon such terms and conditions. The non-initiating party shall have thirty
days to decide whether to buy or sell. Failure to notify the initiating party of
such decision on a timely basis shall be deemed a decision to sell.
The closing of any purchase and sale of Units pursuant to these buy-sell
provisions shall occur no later than 15 days following the delivery of the
notice of election set forth above or such earlier date as shall be specified in
writing by the purchasing party. At any such closing, the selling party shall
sell, transfer and assign to the purchasing party all right, title and interest
in and to the selling party's Units, free and clear of all liens, claims and
encumbrances; the purchasing party shall pay for such Units in cash or
immediately available Federal funds; and, at the request of the purchasing
party, the selling party shall execute all other documents and take such other
actions as may be reasonably necessary or desirable to effectuate the transfer
of the Units and to carry out the purposes of this letter agreement.
Purchase of Additional Units
Prior to the Standstill Expiration Date, the parties subject to the Standstill
Agreement (whether directly or by assumption of the obligations of LFG
thereunder) (such parties being collectively referred to as the "Standstill
Parties") are permitted to purchase up to 25% of the issued and outstanding
Units. In the event that less than such amount is tendered pursuant to the Offer
(and/or already owned by the Standstill Parties on the Expiration Date), then,
prior to the Standstill Expiration Date, AHI and its affiliates will be entitled
to purchase up to 41.8% (or, if AHI purchases additional Units from Krescent
under the circumstances described under "Purchase of Units" above, then the
total percentage of the Units purchased by AHI whether pursuant to the Offer or
from Krescent subsequent to the Offer) of any Available Units (as hereinafter
defined) and the other Standstill Parties and their respective affiliates,
collectively, will be entitled to purchase the balance of any Available Units,
in each case, without obtaining the consent of or
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<PAGE>
notifying any other party. "Available Units" means the difference between 25% of
the outstanding Units and the number of Units purchased pursuant to the Offer
and/or owned by the Standstill Parties as of the Expiration Date.
No Other Contracts
Except as expressly set forth herein, there are no contracts, arrangements,
understandings or relationships between AHI and Krescent with respect to the
Units.
Further Assurances
Each of the parties agrees that it shall take whatever action or actions as are
deemed by counsel to any party hereto to be reasonably necessary, advisable or
convenient from time to time to effectuate the provisions or intent of this
agreement, and to that end, each party agrees that it will execute, acknowledge
and deliver any further instruments or documents as give force and effect to
this letter agreement or any of the provisions hereof, or to carry out the
intent of this letter agreement or any of the provisions hereof.
Remedies
It is understood and agreed that monetary damages would be an inadequate remedy
for violation of this agreement, and in the case of an actual breach by a party
of the provisions hereof, any one or more of the other parties shall be entitled
to relief by way of injunction, specific performance or other equitable relief.
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